As sure as night follows day, the housing market will eventually see better times.
In putting together a plan for the future I personally think you need to have studied the past. The following are a three area's that I feel like might be worth noting, and sharing with other "students" of LIFE!
In the long run, the number of units added depends on three factors:
I. Household formation
Over the past 10 years, an average of 1.35 million new households were formed yearly.
Based on the Census Bureau's population projections, household formation should average about 1.30 million per year over the next 10 years. This could be slightly understated, there is another report by the Harvard's Joint Center for Housing Studies, the "national brain trust", the report preparers believe that the Census immigration projections are too low, and that household formation will average closer to 1.46 million annually year through 2015.
II. Demand for second homes
Demand for second homes should add another 150,000–200,000 units to demand each year. This estimate comes by adding up three numbers from the Census Bureau's Housing Vacancy Survey:
1. Homes held for seasonal use
2. Vacant homes held for occasional use
3. Homes "temporarily occupied by persons with usual residence elsewhere."
III. Demolition of existing homes
Demolitions account for another 450,000–500,000 increase in annual demand. Between 1995 and 2005, according to the Census Bureau's Components of Inventory Change, 196,000 homes were lost to demolitions and natural disasters every year, another 141,000 were converted to nonresidential structures, and another 159,000 were badly damaged or condemned. In total, 4.96 million housing units were removed from the housing stock over a 10-year period, or about half a million per year.
When you combine all three~household formation demand plus second homes plus demolitions~ the totals equals about 2 million units per year. Real-estate bubbles have a way of popping up every 20–30 years, and are unlikely to ever be eliminated entirely. Let's just hope we've all learned our lesson, and spent time wisely preparing for the next wave.
History will repeat itself, as it always has.
|